Information Technology Project Management
Information Technology Project Management
9th Edition
ISBN: 9781337101356
Author: Kathy Schwalbe
Publisher: Cengage Learning
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Chapter 12, Problem 1DQ

List five reasons why organizations outsource. When should an organization choose not to outsource? Why are some organizations moving their software development work back in-house? Why are some organizations beginning to use onshoring?

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Reasons to outsource:

  • To reduce fixed costs and capital investment as approaching other companies to do work helps in reducing initial inflow requirement to the project.
  • Improve accountability as a good contract helps reduce the risk of the company but reduce the daily requirements of supervision.
  • Focussing on core competency of the business. It might not be the more added value of the company. For example, a company can outsource manufacturing process while focussing on the design part.
  • Ensuring flexibility of operations to vary staff, production requirement easily as per demand.
  • Accessing expertise in skill and technology. Approaching expert professionals and organizations will only help to improve efficiency and results.
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Reasons for not to outsource:

  • Companies might need more control over a project, this monitoring might not be applicable in outsourcing.
  • Dependency over an external company can affect their performance. So, companies might avoid that.
  • The information might be of strategic importance and provide a competitive advantage. This cannot be shared with other companies in the market.
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Reasons for organizations to move back IT projects in-house:

  • IT projects can be seen as services that be placed along with core activities.
  • If the organization is ahead of competitors in the market, software development can be moved in-house.
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Reasons to use on-shoring:

  • It contributes to the development of economy and ensuring improvement in investments and job opportunities in the local level.
  • It provides opportunity for better collaboration.
  • Also reduces the cost of operation and ensure low-cost of resources.

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